Porsche lifts stake and will bid for Volkswagen

DavidWeidner

NEW YORK (MarketWatch) -- Porsche AG is increasing its stake in Volkswagen AG to 31% and will make a bid for the German automaker in order to block a possible takeover of Europe's biggest automaker, the company said Saturday.

Stuttgart-based Porsche (693773) said its supervisory board authorized lifting its stake from the 27.3% of Volkswagen it (766400) already owns and, as a result, will make a mandatory bid for the entire company.

Porsche said it would only offer the minimum price allowed by law as part of the mandatory offer. Porsche expects the offer to be 100.92 euro ($134.18) for a VW share. VW shares closed up 6.17% on Friday to 117.95 euro, or $156.83.

Volkswagen's market value is $45.05 billion.

A spokesman for Porsche told WSJ.com that the company did not expect many shareholders to accept the bid and that Porsche did not have intentions to buy VW with the tender offer. But he did say that Porsche has not ruled out a buyout or raising its stake in VW above 31%.

With Saturday's move, however, Porsche may be able to block a full takeover by a rival, the report said. A law that had protected VW from unwanted buyers is expected to be repealed by the European Union.

Porsche and the German state of Lower Saxony, which holds 20% of Europe's biggest car maker, will between them hold 51% of the company. The state of Lower Saxony, which is a passive investor in VW, welcomed Porsche's move.

Porsche called the bid a "logical step" to meet competition including Japan, India, Russia, Malaysia and China, now the second-largest auto producing country in the world, according to the company.

"Porsche is firmly convinced that a closer bond with VW through an increase of the stake to more than 30% of the Volkswagen ordinary shares will produce benefits for both partners without diluting or indeed endangering the identity of Porsche," the company said in a statement. "Quite the contrary: Porsche will perform its economic and social role even more strongly."

Porsche said the proposed combination will be formed as a holding company and converted to a European stock corporation with 12 supervisory board members and be based in Stuttgart. More details of the structure will be decided or announced at the company's annual meeting in June, the company said.

Porsche bought into Volkswagen in late 2005. Ferdinand Piech, a member of the family that controls Porsche, is board chairman of VW.

Porsche and Volkswagen have collaborated in the past in production. The earliest Volkswagen Beetle was designed by Porsche's founder, and several Porsche production cars in the late 1960s and early 1970s were the result of joint ventures, Porsche said. In recent years, the companies have built the sport-utility cars: Porsche Cayenne, Volkswagen Touareg and Audi Q7.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.